This project addresses the mechanism of unfolded protein response (UPR) and non-alcoholic fatty liver disease (NAFLD). Upon accumulation of unfolded or misfolded proteins in the lumen of the endoplasmic reticulum (ER), eukaryotic cells adopt a conserved and fundamentally important UPR pathway to turn on the expression of major ER chaperones and proteins involved in ER-associated degradation to alleviate stress. This critical protein quality control mechanism is transmitted by three ER trans-membrane UPR sensors including IRE1, PERK and ATF6. The significance of UPR research is far-reaching in medicine; it is highlighted and supported by the 2014 Albert Lasker Prize awarded to Drs. Kazutoshi Mori and Peter Walter. The mechanism whereby UPR sensors are triggered however remains a subject of intense debate, which is important to resolve given the ubiquitous implication of UPR in physiology and diseases. Present models include direct binding of ER sensors by misfolded proteins and dissociation of Grp78 from the luminal domains of ER sensors. Neither of the models sufficiently explains the exquisite sensitivity and high efficiency of the system which allows cells to react and adapt to stress in real time. We have produced an exciting body of evidence implicating CNPY2, a previously unknown ER protein in UPR, in activating all three UPR sensors in response to ER stress. CNPY2 is highly expressed in the liver in the steady state and can be further induced by UPR via direct transactivation by CHOP. Knockout (KO) of cnpy2 from mice silences UPR pathways, blocks CHOP expression, and protects cells from UPR-induced cell death. Remarkably, the KO mice are rendered highly protective against high fat diet (HFD)-induced ER stress and non-alcoholic fatty liver disease (NAFLD). In turn, CNPY2 overexpression increases the UPR and apoptotic signals in cells upon ER stress induction. Thus, a novel model of UPR sensing that involves CNPY2 is emerging. We hypothesize that CNPY2 is a critical positive initiator for general UPR in the liver, and that it i required for ER stress-induced NAFLD. We propose two specific aims to address our hypothesis. Aim 1 will determine the molecular mechanism of CNPY2- regulated UPR initiation, using biochemical, biophysical and structural approaches. Aim 2 will be focused on untangling the mechanisms of CNPY2 in regulating hepatosteatosis by systemically studying the roles of CNPY2 in: 1) lipogenesis and lipid metabolism; 2) regulating lipoprotein secretion and the biogenesis of LDL receptor; 3) controlling calcium homeostasis related to mitochondria-ER cross-talk. Collectively, this proposal shall have a significant impact in understanding the mechanism of UPR sensing, and the pathogenesis of NAFLD.